By: Daniel W. Reilly

With the bailout vote in the rear view mirror and the stock market still spiraling downward, Rep. Henry Waxman (D-Calif.) found a new target Tuesday, questioning why insurance giant American International Group took executives to an exclusive resort, less than week after the federal government bailed out the struggling company.

Waxman’s House Oversight and Government Reform Committee heard from two former top AIG executives in a hearing on what led the company to the brink of collapse, only to be rescued by an $85 billion bailout on Sept. 16. It was Waxman’s second hearing in as many days on the financial collapse. On Monday he took Lehman Bros’ CEO Richard Fuld to task for his role in that company’s failure.

Then he trained his sights on AIG.

“Less than one week [after the government intervened], AIG held a week-long retreat for company executives at the exclusive St. Regis Resort in Monarch Beach, Calif.,” said Waxman in his opening statement.

“Invoices provided to the Committee show that AIG paid the resort over $440,000, including … $23,000 in spa charges.”

An AIG spokesperson later told Bloomberg News that the trip was scheduled a year earlier to reward top salespeople from the company’s life insurance business. 

While Lehman and AIG are rich targets for congressional inquiries, Waxman has come under fire for not scheduling investigative hearings into Fannie Mae and Freddie Mac, much to the dismay of Republicans.

On Tuesday, former AIG CEO Maurice Greenberg was expected to testify, but canceled his appearance due to illness, leaving only former CEOs Martin Sullivan and Robert Willumstad.

Like he did with Fuld on Monday, Waxman chastised the executives for what he saw as a failure to accept responsibility for the company’s collapse.

“In each case, they refuse to accept any blame for what happened to their companies,” Waxman said. “In each case, the companies and their executives grew rich by taking on excessive risk. … And in each case, their executives are walking away with millions of dollars while taxpayers are stuck with billions of dollars in costs.”

Waxman also cited internal documents alleging that AIG executives hid the full extent of the firm’s risky business ventures from auditors.

Sullivan and Willumstad defended their actions, instead blaming complex accounting rules that forced the company to take on billions of dollars in losses.

However, former SEC Chief Accountant Lynn E. Turner bristled at the CEO’s defense during the hearing, arguing that blaming the accounting rules for the losses is like “blaming the thermometer…for a fever.”

And with Wall Street already under scrutiny after Congress approved a $700 billion bailout last week, AIG’s expensive corporate retreat gave many committee members the opening they needed to sound off.

"They were getting their manicures, their pedicures, massages, their facials while the American people were paying their bills," said Rep. Elijah Cummings (D-Md.).

Republican Rep. Mark Souder of Indiana also piled on, saying that the “unbridled greed” of many Wall Street executives is “so disgusting it’s hard to put into words.”

Later this month, Waxman’s committee is expected to hold hearings on hedge funds, the breakdown of credit ratings agencies and the role of financial regulators.

In an ongoing to subplot to the hearings, several GOP committee members questioned why Waxman has yet to schedule a hearing on mortgage giants Fannie Mae and Freddie Mac.

After Monday’s hearing, Republican Reps. Christopher Shays of Connecticut, Tom Davis of Virginia and John Mica of Florida issued a joined statement calling for hearings on the matter.

“We need to keep the toxic twins, Fannie and Freddie, at the center of this hearing,” said Shays on Tuesday. “We can’t wait till Halloween to unmask these two monsters of corporate finance.”

Waxman said a request to hold hearings on Fannie and Freddie would be “pursued,” but did not offer any specifics.

A spokesperson for Waxman did not respond to a request for more information on the matter.

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